How should electric rates be set now?

That’s the question that lurks behind a bill currently winding its way through the Legislature. Sponsored by Rep. Senfronia Thompson, D-Houston, House Bill 3610 and its companion, Senate Bill 1693, would allow streamlined rate cases for the one piece of the Texas electricity market that hasn’t been deregulated – transmission.

The idea is that those prolonged, messy rate cases that used to drag on for years are now a thing of the past. “Wires” companies like CenterPoint in Houston no longer own power plants, and no longer set customer rates. Rate adjustments generally relate to straightforward capital investments designed to improve reliability.

“This is just how many poles and wires are you putting up,” CenterPoint spokesman Floyd LeBlanc said. “That part of the rate case is not controversial.”

Actually, it is. Consumer groups are complaining that the bill would allow utilities to hide big expenses from public scrutiny perhaps for decades. Although CenterPoint doesn’t charge consumers directly, transmission rates are passed through to the retail rates that consumers in the deregulated market pay.

If the bill becomes law, companies like CenterPoint could adjust their rates with just a cursory review by the Public Utility Commission as many as four times before they had to submit to a full-scale rate review.

LeBlanc maintains the bill is good for consumers because it lowers legal fees that the company has to pay in contested rate cases, and rates could, at least in theory, go down in some cases. The result, he said is “audit-based rate making as opposed to litigation-based rate making.”

Consumer groups warn that the bill will make it easier for utilities to hike rates, inflate their profits and bloat spending.

LeBlanc pointed to the contentious “true-up” case of 2004, which was tied up in litigation for years. That’s the sort of protracted legal battle CenterPoint would like to avoid in the future. No doubt, but that case also was about how utilities were going to foist onto consumers the cost of power plants built under regulation. It’s an example of exactly why we need contested rate cases.

While we’re not likely to see another such case again, it’s a reminder that the regulated market has been defined by utilities getting what they want and consumers paying the price. If we’ve learned nothing else in the past decade, we should at least have learned to be wary of utilities touting supposed consumer benefits.